Hollywood Has Collected More Than $860M In Foreign Levies

EXCLUSIVE: Hollywood’s guilds and production companies have shared more than $860 million in foreign levies over the last 24 years – a windfall created by European copyright laws that compensate the “authors” of films and TV shows for the home taping, rental and cable retransmission of their work, though recent annual reports show the numbers have been declining in recent years.

Half the money collected has gone to the MPAA’s member companies, and the other half is split between members of the DGA and the WGA. SAG-AFTRA receives a small portion of the producers’ share, which it passes along to actors. The levies, which come from 19 countries – including Germany, France and Spain – are separate and apart from the foreign residuals that writers, directors and actors receive as a result of the guilds’ collective bargaining agreements.

To date, the WGA has collected $208.9 million for writers, and the DGA has collected a similar amount for directors. The companies, meanwhile, have collected about $418 million. SAG, and now SAG-AFTRA, has collected nearly $30 million.

At the current collection rate of more than $50 million a year, the total will pass the $1 billion mark sometime in 2019.

WGA West

According to the WGA West’s most recent report, the guild collected $13.8 million for the fiscal year ended March 31, 2016. But that’s down more than $2 million from last year, and about $4.5 million less than five years ago.

Since first receiving the funds in 1992, the WGA has distributed nearly $179 million to writers and their heirs. The guild currently has a balance of $18.7 million that it has yet to distribute, and over the last four years has given the Actors Fund nearly $2.7 million that it was unable to deliver to writers it couldn’t locate. Since 1992, the WGA has also collected nearly $9.5 million in interest and investment income from the levies, and has assessed $8.9 million in fees to administer the program.

DGA

The DGA, meanwhile, has distributed more than $181 million to directors over the last 24 years, including more than $20 million to more than 5,000 non-members. According to the DGA’s latest report though, for the fiscal year ended December 31, 2015, the guild collected $13.3 million in foreign levies last year – down $1.9 million from the previous year, and about $2.7 million less than five years ago. Unlike the WGA, the DGA annual reports don’t list a running total of income and disbursements. Over the last five years, it’s collected nearly $75 million and distributed nearly $81 million.

The DGA’s foreign levy fund currently has a balance of $10 million, and over the last five years, has collected $208,809 in interest – compared to $578,199 in interest and investment income collected by the WGA during the same time period. Over the last five years, the DGA has deducted $2.9 million in administrative fees, compared to $3.9 million in administrative fees assessed by the WGA over the same time frame.

SAG-AFTRA

According to SAG-AFTRA’s latest report, for the fiscal year ended April 30, 2014, the guild collected $2.8 million in foreign levies – down $700,000 from the previous year. (SAG-AFTRA has yet to release its data from last year.) Since 1997, SAG – and now SAG-AFTRA – has distributed nearly $20.9 million to actors; assessed the program $2.9 million in administrative fees, and collected $1.4 million in interest on the funds held in trust. Two years ago, the guild had a balance of $6 million that had yet to be distributed.

The levies are collected by foreign collection societies from taxes imposed by foreign governments on the sale of blank videocassettes and DVDs; on the sale of VCRs and DVRs, and from foreign taxes levied on the cable retransmission of American programs. The idea is that artists and “authors” should be paid when their shows are copied off the air. That this vast pool of money is shared by writers and directors at all is due to the fact that for copyright purposes, many foreign countries – unlike the U.S. – recognize writers and directors as the “authors” of their films and TV shows.

In the U.S., only the production companies are deemed the “authors” of their shows.

MPAA

The MPAA initially maintained that under U.S. copyright law – and the companies’ collective bargaining agreements with the guilds and the so-called “work-for-hire” clauses contained in personal service agreements – that only the production companies were entitled to divvy up these foreign royalties. The WGA West and the DGA, however, joined forces and challenged the companies, arguing that because the payments were mandated by foreign laws, the copyright laws of those countries – and their definitions of authorship – should prevail.

After years of wrangling, the guilds and the companies settled their dispute and entered into an agreement on June 1, 1990, that provided for a 50%-25%-25% sharing of the foreign levies. Before long, it will be a billion-dollar agreement.